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M'sian govt increases fuel prices to reduce country's deficit
Publication Date : 03-09-2013
The price of RON95 petrol and diesel in Malaysia has been increased by 20 sen, as one of the measures to rationalise subsidies by the government to reduce the country’s fiscal deficit.
Prime Minister Najib Tun Razak announced the decision, saying that it would save the government 1.1 billion ringgit (US$337 million) from September to December this year and 3.3 billion ringgit annually.
Before the revision, the price for RON95 was 1.90 ringgit per litre and 1.80 ringgit for diesel. The price increase for RON95 was in 2010.
“Currently, the government subsidises 0.83 ringgit for each litre of RON95 petrol and 1 ringgit for a litre of diesel.
“This brings the total fuel subsidy allocation for 2013 up to 24.8 billion ringgit. The reduction of 0.20 ringgit in fuel subsidy means that the government will still subsidise 0.63 ringgit per litre of RON95 and 0.80 ringgit per litre of diesel,” Najib said at a press conference after chairing a meeting for the Fiscal Policy Committee (FPC) Monday.
Many had predicted the price rise but the timing was a surprise as Najib had been expected to announce it during the tabling of the Budget.
To ease the burden on low-income and vulnerable groups in the fuel subsidy rationalisation, Najib said the quantum for BR1M, or the 1Malaysia People’s Aid, would be increased in Budget 2014.
He said a comprehensive “social safety net” and further fiscal measures would also be introduced.
Najib said the FPC had reaffirmed the government’s commitment to achieve a fiscal deficit target of about 3 per cent of gross domestic product by 2015 and attain a balanced budget by 2020.
“The moderation in the current account of the balance of payments (BOP), coupled with continued fiscal deficits pose medium-term risks to the economy.
“Currently, our subsidy system benefits everyone, including the higher income group and foreigners.
“Thus, we need to move to a more targeted subsidy system that caters to vulnerable groups,” Najib said.
Other measures announced by the prime minister included the giving of priority to public sector projects with low-import content and high-multiplier effects.
“Projects with high import components will be sequenced accordingly, so as not to adversely impact the BOP position.
*US$1 = 3.27 ringgit